Shocking revelations showing how insider traders manipulate the markets and the press have come to light at a trial in London.
The City’s biggest and most expensive insider trading investigation took eight years and £14 million to bring to trial.
Operation Tabernula ended after the 14-week trial at Southwark Crown Court returned verdicts that convicted two of the five defendants.
During the trial, the jury heard that Lehman Brothers and Deutsche Bank corporate broke Martyn Dodgson and accountant Andrew Hind skimmed close to £700,000 off insider share trading between 2007 and 2010.
Dodgson was jailed for 54 months and Hind for 42 months. Three other defendants were acquitted.
Trusting the money markets
The court was told that the market was rigged by the traders, who had access to corporate deals about to come to market from inside City banks.
Besides having inside knowledge, the traders also regularly briefed journalists at the Financial Times and Daily Mail about the fortunes of shares, many of which lost money.
None of the journalists were accused of any wrongdoing.
Added to these revelations are fixing scandals faced by the big banks, including the LIBOR rate rigging scandal.
One bank in crisis is Deutsche Bank, which has seen profits and share prices fall as regulators have ordered the payment of close to $13 billion dollars in fines and lawsuits involving a succession of wrongdoing accusations since 2012.
The wider concern for investors is can they trust the money markets?
Investments and betting
Insider trading, rate rigging and other financial scandals make investing in equities no better than betting cash in a casino.
Backing a fund manager is the same as placing a bet – except for financial commentators tend to compare performance against the market.
A better measure is comparing how fund managers perform against each other, which is how punters bet on horses.
Form against other horses tends to be the yardstick for a bet.
Some analysts complain fund managers only do as well as the market because they do not have to beat anything other than the index they are tracking. However, if they had to beat their rivals and the index, maybe the returns would be better for investors.
One place to find this data is the Trustnet web site